Bloomberg reported on February 12 that the US Federal Reserve is signaling to banks that it plans to drop some of its prior warnings (also known as matters requiring attention), opting instead to focus on immediate risks to a bank’s financial health and less on processes and procedures. This memo comes as Vice Chair for Supervision Michelle Bowman continues to relax the “Washington’s matrix of rules,” which banks say have become too complex, with more and more rules being added since the Great Financial Crisis.
This move by the Fed is the most recent of the Trump administration’s efforts to make the regulatory environment easier for banks.
In November 2025, the Federal Deposit Insurance Corporation (FDIC), Federal Reserve, and the Office of the Comptroller of the Currency relaxed capital requirements for banks (specifically the supplementary leverage ratio), which reduced capital requirements by $13 billion for global systemically important banks and $219 billion for their subsidiaries.
In October 2025, the US Fed Vice Chair for Supervision announced her plans to restructure the Fed’s supervision and regulation division (S&R) and cut its staff by 30%. According to a memo sent to staff and seen by Bloomberg:
She expects S&R to have a smaller overall footprint of roughly 350 employees – a reduction of approximately 30% from the previous authorized headcount of nearly 500 employees – by year-end 2026.
In October 2025, the FDIC revealed a plan that would narrow the way examiners issue warnings to lenders. Acting Chair Travis Hill said that examiners should focus on material risks, rather than “a litany of process-related items that are unrelated to a bank’s current or future financial condition,”
Given this favorable regulatory environment for banks, let us now take a look at 10 of the best bank stocks to buy in 2026.
Our Methodology
We filtered bank stocks, both regional and diversified, in the US market, with at least $2 billion in market capitalization, at least three analysts covering them, and at least 5% median projected upside from analysts. We then filtered the list to only contain stocks with at least 15 hedge fund holders, according to Insider Monkey’s proprietary hedge fund database, which tracks 978 hedge funds as of Q3 2025. Finally, we selected the 10 stocks with the highest number of hedge fund holders. When two or more stocks were tied in hedge fund holdings, we used the median analyst-projected upside as the tiebreaker.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Note: All data presented are as of 13 February 2026, market close.
10. East West Bancorp Inc. (NASDAQ:EWBC)
Number of Hedge Fund Holders: 27
East West Bancorp Inc. (NASDAQ:EWBC) is one of the 10 Best Bank Stocks to Buy in 2026.
UBS, on February 4, marginally trimmed its target price on East West Bancorp (EWBC) to $125 (from $126). Despite the target price cut, the firm retained its Neutral call on the stock, as it updated its bank models following the release of Q4 2025 results. The firm noted that mid-cap banks as a whole performed strongly in the previous quarter, avoiding credit risk concerns. It also noted that investor sentiment on regional banks is likely to remain high, supported by a steepening yield curve, accelerating loan growth, and increased M&A activity, such as Santander’s (SAN) acquisition of Webster (WBS).
EWBC reported its earnings on January 22. The company grew its Q4 net income by 21.5% YoY to $356.3 million (from $293.1 million), which led to a 103-basis point YoY improvement in the bank’s return on average common equity (from 15.08% points to 16.11% points). This strong result allowed EWBC to raise its quarterly dividend by 33% to $0.80 (from $0.60) and translated into a 15.9% YoY growth in its book value per share (from $55.79 to $64.68).
The earnings growth was driven primarily by an 11.9% YoY growth in net interest income (NII) (from $588 million to $658 million), which in turn was driven by both net interest margin (NIM) expansion and loan growth. NIMs rose 17 basis points to 3.41% (from 3.24%), as the bank’s cost of deposits fell 43 basis points to 2.16% (from 2.59%). The lower cost of funds from deposits more than offset the ~31-basis point decline in average loan yields (from 6.51% to 6.20%).
Loan book, meanwhile, grew 6.0% YoY to $56.9 billion (from $53.7 billion). For 2026, the bank’s management is expecting a 5% to 7% YoY increase in both loans and net interest income.
East West Bancorp Inc. (NASDAQ:EWBC) is a holding company that operates East West Bank. The company has two main operating segments: Consumer Banking and Commercial Banking. It is based in Pasadena, California, and was founded in August 1998.
9. SouthState Bank Corporation (NYSE:SSB)
Number of Hedge Fund Holders: 32
SouthState Bank Corporation (NYSE:SSB) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 4, UBS slightly increased its target price on SouthState Bank (SSB) to $121 (from $120) and reiterated its Buy recommendation. The firm liked what it saw in the 4th quarter of 2025 from mid-cap banks, which delivered strong overall results and avoided asset quality deterioration in Q4. It also expects investor momentum on regional banks to remain strong, due to yield curve steepening, loan growth acceleration, and increased M&A activity.
The bank released its Q4 2025 results on January 22, which showed strong net income growth of 71.8% YoY to $247.7 million (from $144.2 million). On a per share basis, diluted earnings grew 31.6% YoY to $2.46 (from $1.87). The strong earnings growth yielded a 24-basis point improvement in return on average assets (from 1.23% to 1.47%) and a 178-basis point increase in return on common equity (from 9.72% to 10.90%). It also led to an 18.4% YoY growth in book value per share, from $77.18 to $91.38.
Strong earnings growth was driven primarily by a 57.2% YoY increase in net interest income (NII) to $581.1 million (from $369.8 million), which in turn was driven by both net interest margin (NIM) expansion and strong growth in the bank’s earning assets. NIMs expanded by 38 basis points YoY to 3.86% (from 3.48%), as average earning asset yields improved 46 basis points YoY to 5.62% (from 5.16%). This yield improvement outweighed the 9-basis point increase in the bank’s average cost of funding.
Earning assets grew 41.5% YoY to $59.9 billion (from $42.3 billion), with most of the growth coming from a 43.0% expansion in the bank’s loan book (from $33.8 billion to $48.4 billion). This $17.6 billion increase in earnings assets was mostly funded by a $17.1 billion YoY increase in deposits (from $38.1 billion to $55.1 billion), the rest by equity.
Asset quality, meanwhile, did not materially deteriorate in Q4. Net charge-off ratio slightly increased by 3 basis points YoY to 0.09% (from 0.06%) and improved by 18 basis points when viewed quarter-on-quarter. Non-performing loan %-age increased 1 basis point YoY to 0.64% (from 0.63%). Allowance for credit loss %-age improved 17 basis points YoY to 1.20% (from 1.37%). As a result, provisions for credit losses only grew 3.6% YoY to $6.6 million (from $6.4 million).
SSB’s board of directors also approved a new stock purchase plan, which would allow the bank to repurchase 5.56 million of its common shares. This figure represents roughly 5.6% of the company’s weighted average common shares outstanding as of 31 December 2025.
SouthState Bank Corporation (NYSE:SSB) is a financial services company that owns SouthState Bank, a nationally chartered bank serving 1.8 million customers in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, Alabama, Virginia, and Tennessee. The bank is based in Winter Haven, Florida.
8. Commerce Bancshares Inc. (NASDAQ:CBSH)
Number of Hedge Fund Holders: 34
Commerce Bancshares Inc. (NASDAQ:CBSH) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 6, the board of directors of Commerce Bancshares (CBSH) declared a quarterly dividend of $0.2750 per share. This figure represents a 5% increase over the prior dividend rate of $0.2620 (after adjusting for the 5% stock dividend from last December 16) and marks the 58th consecutive year the bank has raised its cash dividend rate. The payment date is March 24, while the record date is March 6.
This dividend increase comes on the heels of the release of the bank’s Q4 2025 results on January 22. The report showed a 3.4% YoY growth in attributable net income (from $136.1 million to $140.7 million). On a per share basis, diluted earnings grew 5.2% YoY to $1.01 (from $0.96).
The earnings growth was driven primarily by a 6.2% YoY increase in net interest income (NII), which in turn was driven by both net interest margin (NIM) expansion and loan growth. NIMs expanded by 11 basis points YoY to 3.60% (from 3.49%). The margin improvement was driven by a 29-basis-point YoY decrease in average cost of funding to 1.75% (from 2.04%), which more than offset the 9-basis-point YoY deterioration in average earning asset yields to 4.74% (from 4.83%).
The bank’s loan book, meanwhile, grew 3.5% YoY to $17.7 billion (from $17.1 billion). Business and consumer loans drove this growth, increasing 6.0% YoY (from $6.0 billion to $6.3 billion) and 5.4% YoY (from $2.1 billion to $2.2 billion), respectively. Real estate (1.3% YoY growth from $8.1 billion to $8.2 billion) and credit cards (0.4% YoY decline from $568 million to $566 million), meanwhile, lagged. The $0.6 billion loan book growth was supported by a $0.7 billion increase in deposits to $25.6 billion (from $24.9 billion).
Commerce Bancshares Inc. (NASDAQ:CBSH) is a holding company that owns Commerce Bank. Commerce Bank provides a range of banking services across the consumer, commercial, and wealth segments. The bank is based in Kansas City, MO, and was founded in August 1966.
7. Western Alliance Bancorporation (NYSE:WAL)
Number of Hedge Fund Holders: 35
Western Alliance Bancorporation (NYSE:WAL) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 4, UBS trimmed its target price on Western Alliance (WAL) by 0.9% to $106 (from $107) but retained its Buy recommendation on the stock. The firm said in a research note to investors that Q4 2025 results from mid-cap banks were strong and that it did not see any early asset quality concerns. It also thinks that the steepening of the yield curve, combined with faster loan book expansion and more M&A activity, will sustain investor sentiment for 2026.
This update follows Western Alliance’s 4th-quarter 2025 earnings report on January 26, which highlighted a 32.4% YoY increase in attributable net income (from $213.7 million to $282.9 million). On a per share basis, diluted earnings grew 32.8% YoY to $2.59 (from $1.95). The strong earnings growth yielded a 19-basis-point improvement to 1.23% (from 1.04%) in return on average assets and a 230-basis-point increase to 16.9% (from 14.6%) in return on average total common equity.
The strong Q4 earnings growth was driven primarily by a 15.0% YoY increase in net interest income (NII), which in turn was caused mostly by loan growth and a slight expansion in net interest margins (NIM). Total loans held for investment grew 9.3% YoY to $58.7 billion (from $53.7 billion). Commercial and industrial loans accounted for 86% of the loan book expansion, growing 20.8% YoY to $27.9 billion (from $23.1 billion). Construction & land loans, meanwhile, dragged, falling 8.9% to $4.1 billion (from $4.5 billion). The $5.0 billion YoY increase in loan growth was funded fully by the $10.8 billion increase in total deposits to $77.2 billion (from $66.3 billion).
Net interest margin, meanwhile, expanded slightly by 3 basis points YoY to 3.51% (from 3.48%), as average funding costs fell by 41 basis points YoY to 2.11% (from 2.52%). The fall in funding costs barely offset the erosion of earning asset yields (13 basis points YoY for investment securities and 33 basis points YoY for loans). The bank estimates that every 100-basis-point increase (decrease) in overall interest rates will increase (decrease) net interest income by 2.7%.
Asset quality, meanwhile, was relatively stable YoY across various metrics. Special mention loans %-age improved by 18 basis points YoY to 0.55% (from 0.73%), non-performing loans %-age improved by 4 basis points YoY to 0.85% (from 0.89%).
Moving forward, the bank’s management expects to grow loans by $6 billion (10.2% YoY) in 2026, funded by an $8 billion increase in deposits (10.4% YoY). They expect the US Federal Reserve to cut rates twice (25 basis points each cut). The loan and deposit growth, combined with the rate cut, will drive 11%-14% YoY growth in net interest income. Management also sees asset quality slightly deteriorating, with net charge-off percentage increasing to 25-35 basis points (from 24 basis points in 2025).
Western Alliance Bancorporation (NYSE:WAL) is a holding company that owns and operates West Alliance Bank, operating in the commercial, consumer, and corporate segments. The company is based in Phoenix, Arizona, and was founded in 1995.
6. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Number of Hedge Fund Holders: 42
Huntington Bancshares Incorporated (NASDAQ:HBAN) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 9, JPMorgan analyst Andrew Dietrich raised his target price on Huntington Bancshares by 5.0% to $21 (from $20) and kept his Overweight call on the stock. This TP update comes as JPMorgan updated its models for large-cap banks following the release of the 4th quarter results.
The firm thinks bank stocks could outperform the broader market in 2026, citing five reasons: (1) Good economic trends, (2) Steady fundamentals, (3) Sticky inflation, which would prevent the US Fed from cutting rates too much in the long term (although he does think the Fed will cut rates twice in 2026), (4) Favorable regulatory environment, and (5) An uptick in bank consolidations, as shown by the recent M&A activity amongst banks.
As for Huntington, it released its Q4 2025 earnings on January 22, which were headlined by 16.6% YoY growth in attributable net income to $618 million (from $530 million), after adjusting for $118 million in one-time acquisition-related expenses. On a per share basis, adjusted diluted earnings increased 8.8% to $0.37 (from $0.34). This earnings growth yielded a 6-basis-point YoY improvement in adjusted return on average assets to 1.11% (from 1.05%), but a 40-basis-point YoY decline in adjusted return on average common equity to 10.60%.
This adjusted earnings growth was driven primarily by a 14.1% YoY increase in net interest income (NII), which in turn was driven by growth in earning assets and, to a lesser extent, expansion in net interest margins (NIM). Earning assets grew 9.3% YoY to $202.5 billion (from $185.2 billion). Commercial loan growth accounted for 88% of this $17.3 billion increase, growing 21.3% YoY to $87.1 billion (from $71.8 billion). This asset growth was supported by a $13.8 billion increase in deposits to $173.2 billion (from $159.4 billion) and a $0.9 billion increase in net debt to $18.2 billion (from $17.3 billion).
NIMs, meanwhile, expanded 12 basis points YoY to 3.15% (from 3.03%), as the average cost of funds fell faster than the bank’s yields on its earning assets. On the cost side, the average cost of funds improved 36 basis points YoY (from 3.01% to 2.65%). On the yields side, average yields on loans fell 5 basis points YoY to 5.84% (from 5.89%), while average yields on investment securities deteriorated 64 basis points YoY to 3.46% (from 4.10%). Combined, average earning asset yields declined by 17% YoY to 5.25% (from 5.42%).
Huntington Bancshares Incorporated (NASDAQ:HBAN) is a holding company that owns and operates Huntington Bank. The bank operates in two segments: (1) Consumer and Regional Banking and (2) Commercial Banking. The company is based in Columbus, Ohio, and was founded in 1866.
5. Pinnacle Financial Partners Inc. (NYSE:PNFP)
Number of Hedge Fund Holders: 44
Pinnacle Financial Partners Inc. (NYSE:PNFP) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 6, Evercore ISI raised its target price on Pinnacle Financial by 0.9% to $116 (from $115) and retained its Outperform call on the stock. The price change comes as the firm updated the models of the regional banks in its coverage, following the release of Q4 2025 results.
Pinnacle Financial released its 4th quarter earnings report on January 21, which was headlined by a 12.5% YoY growth in net income available to common shareholders to $166.0 million (from $147.5 million). On a per share basis, diluted earnings grew 11.5% YoY to $2.13 (from $1.91).
Earnings growth was driven primarily by a 12.0% YoY increase in net interest income (NII) to $407.4 million (from $363.8 million), which in turn was driven by earning asset growth and a slight uptick in net interest margin (NIM). Earning assets rose 9.5% YoY to $51.7 billion (from $47.2 billion). Loans accounted for 82% of this increase, growing 10.3% YoY to $39.2 billion (from $35.5 billion). The rest came from investment securities, which grew 9.3% YoY to $9.2 billion (from $8.4 billion).
$3.8 billion out of the $4.5 billion asset base expansion was funded by the 10.0% YoY growth in deposits to $41.9 billion (from $38.1 billion). Longer-term debt and other funding sources, which grew 9.1% YoY to $8.0 billion (from $7.3 billion), accounted for the remainder of the growth.
NIMs, meanwhile, showed modest expansion of 5 basis points YoY to 3.27% (from 3.22%) as the reduction in funding costs slightly offset the deterioration in earning asset yields.
Management also provided guidance for 2026 and an update on the expected impact of Pinnacle’s merger with Synovus, which closed on January 1. They expect to realize $250 million in cost synergies over the next three years. They also expect the consolidated loan book to reach $91-$93 billion by the end of 2026, supported by a deposit base of $106.5-$108.5 billion. Management is forecasting two 25-basis-point rate cuts from the US Fed, which would bring consolidated NIMs to 3.45%-3.55%.
Pinnacle Financial Partners Inc. (NYSE:PNFP) is a holding company that owns and operates Pinnacle Bank. The bank offers a wide range of financial services, from banking, investment, trust, mortgage, and insurance, for both consumer and commercial clients. The company is based in Atlanta, Georgia, and was founded in 2000.
4. Truist Financial Corporation (NYSE:TFC)
Number of Hedge Fund Holders: 56
Truist Financial Corporation (NYSE:TFC) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 9, JPMorgan analyst Vivek Juneja raised his target price on Truist Financial by 10.7% to $57.00 (from $51.50) but maintained his Neutral rating on the stock. This target price change comes as JPMorgan updated its large-cap bank forecasts following the release of the 4th quarter results.
The firm prefers bank stocks in this market cycle for five reasons. (1) Good economic trends, (2) Steady fundamentals, (3) Sticky inflation, which could prevent the US Fed from cutting rates too much in the long term (although he does think the Fed will cut rates twice in 2026), (4) Favorable regulatory environment, and (5) An uptick in bank consolidations, as shown by the recent M&A activity amongst banks.
Truist Financial, on January 21, released its Q4 2025 earnings. The report showed net income available to common shareholders grew 5.7% YoY to $1.29 billion (from $1.22 billion). On a per diluted share basis, earnings grew 9.9% YoY to $1.00 (from $0.91). This earnings growth yielded a modest increase in both return on average assets (3 basis points YoY to 0.99%, from 0.96%) and return on average common equity (10 basis points YoY to 8.5% from 8.4%).
The earnings growth was driven by a 3.1% YoY increase in net interest income (NII) to $3.70 billion (from $3.59 billion), which in turn was driven purely by earning assets growth as net interest margin (NIMs) was flat. Earning assets grew 2.5% YoY to $484.6 billion (from $472.6 billion), virtually all of which came from a 7.4% YoY expansion in the bank’s loan book to $330.4 billion (from $306.4 billion). Cash and investment securities, meanwhile, fell 4.8% YoY to $158.6 billion (from $165.5 billion).
The $12 billion YoY increase in earning asset base was supported by a $9.8 billion YoY increase in deposits to $400.5 billion (from $390.5 billion). Debt supplemented the bank’s funding needs, growing $5.6 billion YoY to $69.8 billion (from $64.2 billion).
NIMs, meanwhile, were flat YoY at 3.07%, as the effects of the improvement in funding costs perfectly offset the deterioration in earning asset yields. The bank’s average funding cost improved by 35 basis points YoY to 2.67% (from 3.02%), while earnings yield fell 20 basis points YoY to 5.05% (from 5.25%).
Asset quality was relatively stable across multiple metrics. Nonperforming loans (as a % of loans) increased 1 basis point YoY to 0.48% (from 0.47%), net charge-offs (as a % of loans) decreased 2 basis points YoY to 0.57% (from 0.59%), while credit costs (as a % of loans) increased 1 basis point YoY to 0.62% (from 0.61%).
Truist Financial Corporation (NYSE:TFC) provides banking and trust services across the Mid-Atlantic and Southeastern United States, focusing on two segments: (1) Consumer and Small Business Banking and (2) Wholesale Banking. The company is based in Charlotte, North Carolina, and was founded in December 2019.
3. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 62
The Bank of New York Mellon Corporation (NYSE:BK) is one of the 10 Best Bank Stocks to Buy in 2026.
JPMorgan raised its target price on BNY Mellon by 2.8% to $128.50 (from $125.00), while reiterating the firm’s Overweight call on the stock. This TP update comes as the firm updated its financial models for large-cap banks, following the release of Q4 2025 earnings. In its other bank TP updates, the firm noted that it prefers the banking sector for this market cycle.
BNY Mellon released its Q4 2025 on January 13, which was headlined by 26.3% YoY growth in net income attributable to common shareholders (from $1.1 billion to $1.4 billion). On a per diluted share basis, earnings grew 31.2% YoY to $2.02 (from $1.54). The strong earnings growth yielded a 230-basis point YoY increase in the bank’s return on average common equity to 14.5% (from 12.2%).
Unlike most of the banks on this list, which relied on net interest income, BNY Mellon’s earnings growth was driven by a 5.3% YoY increase in fee revenue (more commonly called non-interest income in most banks) to $3.7 billion (from $3.5 billion). Virtually all the $0.2 billion fee growth is attributable to the 8.0% YoY growth in investment services fees to $2.6 billion (from $2.4 billion). The other segments, such as investment management and performance, foreign exchange, and other fees, were either flat or declined YoY.
While not as prominent as in other banks, net interest income (NII) also contributed to the growth, growing 12.7% YoY to $1.3 billion (from $1.2 billion). NII growth was driven mostly by an expansion of the earning asset base (+8% YoY to $387 billion) and supplemented by a modest expansion in net interest margin (+6 basis points YoY to 1.38%).
For 2026, the bank’s management is targeting 5%+ YoY revenue growth, coupled with 3%-4% YoY growth in non-interest expenses. These targets would translate to 7%-9% YoY pre-tax income growth.
The Bank of New York Mellon Corporation (NYSE:BK) is a global financial services company that offers securities, market, and investment and wealth management services, serving 90%+ of Fortune 100 companies. The company is based in New York City, New York, and was founded in June 1784.
2. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 76
Wells Fargo & Company (NYSE:WFC) is one of the 10 Best Bank Stocks to Buy in 2026.
Baird, on February 13, upgraded Wells Fargo to a Neutral (from Underperform). Despite the rating upgrade, the firm did not change its $85 target price on the company. It noted that the recent selloff in Wells Fargo’s stock (down 8.2% year-to-date) has made the stock’s risk/reward profile look a “little better”. The firm also noted that recent conference updates and presentations (including the UBS Financial Services Conference on February 10 and the company’s earnings update on January 14) make the company’s current valuation appear more reasonable. Both these factors led to Baird’s Neutral rating on the stock.
A month ago, on January 14, Wells Fargo released its Q4 2025 earnings update, which showed a 5.6% YoY growth in net income to $5.4 billion (from $5.1 billion). On a per diluted share basis, earnings grew 13.3% YoY to $1.62 (from $1.43). This earnings growth yielded a 52-basis-point YoY improvement in the bank’s return on average equity to 12.3% (from 11.7%).
Wells Fargo’s earnings growth was driven mostly by a 4.2% YoY increase in the bank’s net interest income (NII) to $12.3 billion (from $11.8 billion). NII was driven purely by an expansion of the bank’s loan book, which offset the contraction of net interest margins (NIM). Loans grew 8% YoY to $986.2 billion (from $912.7 billion). Commercial loans accounted for ~90% of loan growth, increasing 12% YoY to $599.9 billion. Consumer loans lagged, growing only 2% YoY to $386.3 billion. This $73.5 billion loan book expansion was supported mostly by the 4.0% YoY deposits growth to $1,426.2 billion (from $1,371.8 billion).
NIMs, meanwhile, fell 10 basis points YoY to 2.60% (from 2.70%), as the improvement in the bank’s funding costs was not enough to offset the decline in earning asset yields. Wells Fargo’s effective funding cost improved 21 basis points YoY to 2.22% (from 2.43%), while earning asset yield declined 27 basis points YoY to 4.75% (from 5.02%).
For 2026, the bank’s management expects 5.2% YoY growth in net interest income to $50 billion (from $47.5 billion in full-year 2025). This growth will be driven by mid-single-digit loan growth, supported by mid-single-digit deposit growth. The bank is also expecting two to three rate cuts from the US Fed, which would have a slight negative impact on net interest income.
Wells Fargo & Company (NYSE:WFC) is a leading financial services company, providing diversified banking services across the Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management segments. The company is based in San Francisco, California, and was founded in March 1852.
1. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 107
Citigroup Inc. (NYSE:C) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 9, JPMorgan raised its target price on Citi by 3.1% to $134 (from $130), reiterating its Overweight rating on the stock. This target price change comes as JPMorgan updated its large-cap bank forecasts following the release of the 4th-quarter results.
JP Morgan echoed what it said in its research notes for the other banks in its coverage, stating that it likes bank stocks for this market cycle, because of five factors: (1) Good economic trends, (2) Steady fundamentals, (3) Sticky inflation, which could prevent the US Fed from cutting rates too much in the long term (although he does think the Fed will cut rates twice in 2026), (4) Favorable regulatory environment, and (5) An uptick in bank consolidations, as shown by the recent M&A activity amongst banks.
On January 14, Citi released its Q4 2025 earnings, which were headlined by a 13.5% YoY decline in attributable net income to $2.5 billion (from $2.9 billion). Removing, however, the $1.1 billion net income hit from the sale (which included a $1.6 billion foreign currency translation adjustment) of its Russia unit (approved on December 29), adjusted attributable net income grew 25.8% YoY to $3.6 billion. On a per diluted share basis, earnings grew 29.1% YoY to $1.73 (from $1.34). This earnings growth yielded a 6-basis-point YoY improvement in adjusted return on average assets to 0.52% (from 0.46%) and a 125-basis-point YoY improvement in adjusted return on average common equity to 6.55% (from 5.40%).
Earnings growth was driven by a 14.1% YoY increase in net interest income (NII) to $15.7 billion (from $13.7 billion), which in turn reflected growth in the bank’s loan book and a modest improvement in its net interest margin (NIM). Gross loans grew 8.3% YoY to $733.0 billion (from $675.9 billion). ~73% of the loan growth is attributable to the commercial loan segment, which increased $42.3 billion YoY (14.0% YoY growth) to $343.7 billion (from $301.4 billion). The rest was from consumer loans, which grew at a more modest pace of $15.4 billion YoY (3.9% YoY growth) to $408.5 billion (from $393.1 billion).
NIMs expanded modestly by 7 basis points to 2.49% (from 2.42%), as the decline in loan yields was offset by higher deposit costs. Citi’s average cost of interest-bearing deposits improved by 51 basis points YoY to 2.83% (from 3.34%), while its average gross loan yield declined by 54 basis points YoY to 8.30% (from 8.84%).
Citigroup Inc. (NYSE:C) is a financial services provider operating in the Commercial Services, Markets, Banking, Wealth, and US Personal Banking segments. The company is based in New York, New York, and was founded in 1812.
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